Earlier this month, the US District Court for the Northern District of Alabama issued a preliminary approval of the proposed settlement of the class action lawsuit against Blue Cross and Blue Shield, master file number 2:13-cv-20000-RDP.
About the Antitrust Lawsuit
The lawsuit, filed on January 8, 2013, alleged antitrust violations by Blue Cross and Blue Shield (“BCBS”), including accusations that the BCBS companies entered into agreements not to compete with each other by allocating specific geographic markets that each sold insurance in. The lawsuit alleged that these practices were anticompetitive and resulted in financial harm to the provider community and higher costs for subscribers.
The lawsuit withstood its final legal challenge in June of this year, when the US Supreme Court denied a last legal challenge. This paved the way for a settlement agreement, and a preliminary fairness hearing has subsequently approved a $2.8 billion settlement, of which $2 billion is earmarked for participants in the class-action suit, with $700 million going to legal fees, and $100 million paying other expenses of implementing the settlement terms.
Health systems, facilities, and practitioners should expect to receive communications regarding next steps within the next few weeks. Note that the notification may come via email, however, post cards may also be sent. Any emails or post cards that are “undeliverable” will result in a review of national databases in an attempt to find a valid method to communicate with the provider. Multiple attempts will be made in order to ensure the provider has been contacted.
Options for Providers
Providers will have two options:
- Participate in the settlement
- Opt out of the settlement
Opting out simply means that the provider will not be eligible to receive any part of the $2.8 billion settlement, but will be free to file its own legal action against Blue Cross and Blue Shield. Providers choosing to opt out of the settlement must formally do so within 90 days of notification.
Note that providers who choose to “opt out” – and who are successful in any separate legal actions against BCBS – will be eligible for triple damages, under antitrust laws.
What this Means for Claims
The claims period covered by the settlement is from July 24, 2008 – October 4, 2024. Since the plaintiffs’ estimates of the burden on providers showed that the financial impact was as much as 3.5x greater on health systems and facilities, 92% of the award fund has been earmarked for health systems and facilities.
According to a statement by the Illinois Hospital Association, independent estimates calculate that Blue Cross and Blue Shield may have underpaid by as much as 5-10%.
The settlement is expected to improve the process by which providers interact with Blue Cross and Blue Shield – in particular as it applies to the Bluecard process – improve transparency, increase accountability, and alleviate some of the administrative burdens that providers face.
As a part of this, Blue Cross and Blue Shield has agreed to create a cloud-based platform for verifying claims eligibility and tracking.
Additional Benefits
Other expected benefits from the settlement include:
- Enabling hospitals in certain areas to renegotiate certain aspects of their BCBS contracts;
- Creating more transparency regarding the use of third parties and their ability to access provider data;
- Instituting a real-time messaging system that will allow BCBS plans to address certain provider issues;
- Preventing BCBS from requiring providers to participate in certain “non-Blue” networks as a condition to participate with “Blue” plans. (Note to Kentucky and Ohio providers: Kentucky and Ohio laws/regulations already prohibit this practice)
- Establishes automatic claims escalations for certain claims scenarios, and a common claims Appeals form
- Requiring a prompt payment commitment from BCBS (this commitment would be secondary to any applicable state laws or regulations in states that have prompt payment laws / regulations);
- Transforming the “BlueCard” infrastructure; and
- Imposing a monitoring system to oversee BCBS compliance with the settlement terms.
Only providers who participate in the settlement will receive the expected benefits above. Providers who choose to participate in the settlement will have two options for calculating their share of the settlement fund:
- “Default method” – The provider will provide their Tax Identification Number (“TIN”) and National Provider Identifier Number(s) (“NPI”). The plaintiff attorneys will identify allowed amounts attributable to the numbers submitted, and will extrapolate for any missing data. In the event insufficient data is available to develop a credible amount, the provider will be required to use the “Alternate Method”.
- “Alternative method” – The provider will extract the requested data from its own claims databases.
Regardless of the method used, a “regression model” will then be utilized to estimate the impact of BCBS’ conduct, and the provider will then receive payment based on the appropriate pro rata portion of the settlement fund, which will be contingent upon the number of settlement participants.
Please Note the Following Important Dates:
- January 3, 2025 – Class notification complete
- March 4, 2025 – “Opt Out” deadline
- July 16, 2025 – Final Fairness Hearing on the settlement and the distribution of settlement funds.
Contact Blue & Co.
Blue & Co. is continuing to monitor this settlement process. If you have any questions about the lawsuit, the settlement, and/or its impact upon your system/practice, please feel free to outreach to a member of our managed care contract team or your local Blue & Co. advisor.
